Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2008 Jun;43(3):1062-84.
doi: 10.1111/j.1475-6773.2007.00818.x. Epub 2007 Dec 20.

Shareholder value and the performance of a large nursing home chain

Martin Kitchener  1 , Janis O'Meara, Ab Brody, Hyang Yuol Lee, Charlene Harrington
Affiliations

Shareholder value and the performance of a large nursing home chain

Martin Kitchener et al. Health Serv Res. 2008 Jun.

Abstract

Objective: To analyze corporate governance arrangements and quality and financial performance outcomes among large multi-facility nursing home corporations (chains) that pursue stakeholder value (profit maximization) strategies.

Study design: To establish a foundation of knowledge about the focal phenomenon and processes, we conducted an historical (1993-2005) case study of one of the largest chains (Sun Healthcare Inc.) that triangulated qualitative and quantitative data sources.

Data sources: Two main sets of information were compared: (1) corporate sources including Sun's Security Exchange Commission (SEC) Form 10-K annual reports, industry financial reports, and the business press; and (2) external sources including, legal documents, press reports, and publicly available California facility cost reports and quality data.

Principal findings: Shareholder value was pursued at Sun through three inter-linked strategies: (1) rapid growth through debt-financed mergers; (2) labor cost constraint through low nurse staffing levels; and (3) a model of corporate governance that views sanctions for fraud and poor quality as a cost of business.

Conclusions: Study findings and evidence from other large nursing home chains underscore calls from the Institute of Medicine and other bodies for extended oversight of the corporate governance and performance of large nursing home chains.

PubMed Disclaimer

References

    1. Adler S. “The CLTC 50-Plus. Contemporary Long Term Care”. 1999. [February 6, 2007]. Available at http://www.citcmag.com. - PubMed
    1. American Health Care Association (AHCA) Facts and Trends: The Nursing Facility Sourcebook. Washington, DC: AHCA; 2002.
    1. Arling G, Nordquisk R H, Capitman J A. Nursing Home Cost and Ownership Type. Evidence of Interaction Effects. Health Services Research. 1987;22(2):255–69. - PMC - PubMed
    1. Banaszak-Holl J, Berta W B, Bowman D, Baum J A C, Mitchell W. The Rise of Human Service Chains. Antecedents to Acquisitions and Their Effects on the Quality of Care in US Nursing Homes, 1991–1997. Managerial and Decision Economics. 2002;23:261–82.
    1. California Advocates for Nursing Home Reform v. Sun Healthcare Group Inc. 2003. No. GIC803663 (Cal.Super. Ct. January 15, 2003 in San Diego County, CA). Litigation Filed by C. Healey, J. Singh, and M.D. Thamer.

MeSH terms